New Orleans to pay teens $350 a month for financial literacy

More than 100 young people in Louisiana will receive $3,500 next year through a financial education program from the city of New Orleans.

City officials noted Thursday that 125 residents between the ages of 16 and 24 will receive 10 installments of $350 starting next spring. The money will be loaded onto an ATM card provided by the black-owned online bank Mobility Capital Finance. New Orleans Mayor LaToya Cantrell said at a press conference Thursday that the cards will go to residents who are unemployed or not attending school.

The goal, city officials said, is to address the “unbanked” problem plaguing the Big Easy. The “unbanked” is a term the financial services industry has adopted to describe adults who earn money but don’t use bank accounts to help manage those salaries.

One in 20 U.S. households are currently unbanked, June report finds to study of the Federal Reserve Bank of New York. Louisiana has one of the highest percentages of its unbanked population: 15%, according to economic advocacy group Prosperity Now, just behind Mississippi, at 16%.

The unbanked issue is impacting communities of color, Cantrall said in a statement, adding that ATM cards “will address the racial and wealth gaps that we know are prevalent right here in our city.”

New Orleans has received a $500,000 Mayors Grant for Guaranteed Income in December and that money will be used to fund the cards. Mayors for Guaranteed Income is a coalition of US mayors pushing for a national universal basic income program.

Latest Universal Basic Income experience

Indeed, what is happening in New Orleans is the latest example of universal basic income experiments across the country.

The concept of universal basic income, which dates back to the days of the American Revolution, is that every citizen of a given society is given a certain amount of money to spend on whatever they want. It is designed to fight poverty by putting money directly into the hands of those who need it most.


Newark to Launch Guaranteed Basic Income Pilot…

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In New Jersey, the Newark Movement for Economic Equity is a two-year program that pays a random selection of 400 residents, 18 years of age or older and whose household income is 200% below the federal poverty level, an amount of $12,000 each, over two years. Half of these individuals will receive monthly installments of $500, with the other half receiving four installments of $3,000, paid semi-annually. Mayor Ras J. Baraka introduced the program earlier this year and told CBSN’s Tanya Rivero that the data generated by the program will be used to promote a national model.

In California, the Stockton Economic Empowerment Demonstration gave more than 100 randomly selected townspeople living below the poverty line $500 a month for two years. The program has demonstrated higher rates of full-time employment and other positive effects on participants, including better mental health outcomes, economics researchers have found. The program ended in February.

Denver, Gainesville, Florida; Gary, Indiana; Jackson, Mississippi and St. Paul, Minnesota also have — or plan to launch — Universal Basic Income programs.

Sarah J. Greer